Soybean processors’ body urges govt to raise customs duty

By: | Published: August 18, 2016 6:02 AM

The Soybean Processors Association of India (SOPA) has urged the Narendra Modi government to consider an increase in customs duty on soybean — from 12.5% and 20% to 37.5% and 45%, on crude and refined oil.

The Soybean Processors Association of India (SOPA) has urged the Narendra Modi government to consider an increase in customs duty on soybean — from 12.5% and 20% to 37.5% and 45%, on crude and refined oil. This will check large-scale import of cheap soybean oil and enable the domestic industry to start soybean meal exports again. It will also encourage soybean and other oilseed growers, the association feels.

In a representation made to Prime Minister Narendra Modi, SOPA chairman Davish Jain said the soybean processing industry has been going through one of its toughest phases for the last three years and several units had to close down. “The major reason for this is large-scale import of cheap edible oils including soybean oil at low rates of duty, which has pushed up our prices of soybean meal and made us uncompetitive in the world market. Our exports have fallen from a high of Rs 15,000 crore to just Rs 1,500 crore during the last four years. As soybean oil imports rose, soybean meal exports fell correspondingly and from a net foreign exchange earning of Rs 6,545 crore in 2012-13, there was a net foreign exchange outflow of Rs 19,419 crore in 2015-16. The net impact of increased soy oil import alone would be Rs 25,664 crore,” he said.

Soyabean has been planted on 111.83 lakh hectares this year, marginally higher than the previous year’s 110.71 lakh hectares. Despite the largest producing state MP reporting an 8% drop in acreage, the total area under the oilseed has been largely maintained as farmers have taken up the planting in new areas such as Gujarat, while the area has increased in States such as Maharashtra, Telangana and Karnataka.

“The burgeoning import of soybean oil which has increased several fold from a mere 10.55 lakh tonne per annum (average of 2011-13) to 40 lakh tonne (likely import in 2016) is also detrimental to the interest of oilseed cultivation in the country and will take us toward being totally dependent on imported oil as our own production of oilseeds may further go down,” he said in the letter to the PM.

At a time when the entire oilseed processing industry, particularly the soybean processing units, are in great distress and facing closure because of cheap oil imports, the lobby of a handful of large importers and refiners have taken the opposite view in their own self-interest and have asked the government for reduction in duty on crude edible oil. This move has created a clear demarcation between the interests of business, led by importers versus the industry which is striving hard to survive, he said. “The decision to maintain a duty differential of 7.5% between refined and crude oil was taken after careful consideration and a thorough investigation by the tariff commission (ministry of finance) into all aspects of oil refining. The cost of crude oil refining is not more than 5% at current prices and the 7.5% duty differential adequately protects the interest of crude oil importers. The demand for higher differential duty is, therefore, totally unjustified,” Jain said.

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